March 2017 – One rather interesting topic for companies doing business in the Czech Republic in relation to sanctions is the possibility of having the obligation to publish a judgment. This obligation was introduced into Czech law by Act No. 418/2011 Coll., on the Criminal Liability of Legal Entities (“the Act”), as part of a list of sanctions that can be imposed by a court. The imposition of this sanction is limited to legal entities. The topic should be of interest to businesses as its effects can be deleterious to a company’s reputation. In addition, the legal framework for publishing a judgment has considerable shortcomings. Also worth considering is the enforcement of this sanction and possible imposition of a fine, even repeatedly, in the event that the legal person fails to fulfil its obligations imposed by such a ruling.
Legal framework of the publication of a judgment
Sections 15, 23 and 41 of the Act regulates publication of a judgment as sanction. Under the Act, a court may impose this sanction in the event that it finds that the public should know about the judgment handed down by the court, chiefly because of the nature and seriousness of the crime in question and in the event that such a sanction is necessary to protect the safety of persons, property or society. The court may specify the means of communication for publication of a judgment as well as the scope and the term for such publication.
The sanction to publish a court judgment imposes on the convicted legal entity the obligation to make a court ruling (or a part thereof) public, at its own cost, using the means of communication ordered by the court. The publication must include the business name and registered seat of the convicted legal entity. Any data allowing the identification of any individual or legal entity, other than the convicted legal entity, must be made anonymous before publication.
One of the deficiencies of this law is the lack of special provisions for the enforcement of this sanction. Lawmakers neglected to align the criminal legislation with civil legislation relating to the obligations of providers of the means of public communication. The judgment of a court to impose the sanction to publish a judgment establishes the obligation on the convicted legal entity, but not on any third person, e.g., the providers of the means of public communication wherein the judgment is to be published; only a law can oblige providers of the means of public communication to publish a judgment.[1]
The lack of alignment of civil law with criminal law should be considered as a fundamental flaw. The object and purpose of a sanction that imposes the publication of a judgment can hardly be fulfilled if a provider of the means of public communication – for example a specific newspaper – would refuse to publish the judgment. Current laws do not provide for any sanctions on a provider if it refuses.
Publication of a judgment is a sanction with a considerable impact on the reputation of a business. However, the main purpose of this sanction is not to shame the legal entity, but rather to educate and protect the public. In a competitive market, the threat of this sanction also has a crime inhibiting – i.e. a preventive – effect.
As discussed below, the impact of this sanction on a convicted legal entity’s reputation affects not only the legal entity but its employees or business partners as well.
The sanction to publish a judgment may also affect innocent individuals connected with the legal entity, who have no reason to be connected with the criminal act of the legal entity. This is in fact one of the main arguments against introducing the criminal liability of legal entities. [2]
I consider this aspect to be very important. When making the decision to impose the sanction to publish a judgment, the court should consider the impact on individuals associated with the convicted legal entity.
Case law
There is a dearth of Czech case law relating to the publication of judgments. The register of convicted legal entities available on the website maintained by the Ministry of Justice of the Czech Republic (http://eservice-po.rejtr.justice.cz/public) currently contains information about 146 convictions, while only 21 of these involve the publication of a judgment as a sanction.
Of these 21 cases, ten decisions were issued by the Hodonín District Court, eight by the Prague 1 District Court, and one each by the district courts for Prague 8, Teplice and Rychnov nad Kněžnou. This sanction was imposed most often in cases of tax evasion, social security payment evasion (nine cases in total), fraud (seven cases in total), credit fraud, reduction of taxes, fees and other similar mandatory payments (two cases each), subsidy fraud, falsification and altering of public documents and misrepresentation of data on the state of finances and assets (one case each).
The Prague 1 District Court imposed this sanction most frequently for tax evasion and social security payment evasion (six cases in total), while the Hodonín District Court imposed this sanction most frequently for fraud (six cases in total as well).
While the Prague 1 District Court ordered the whole decision to be made public (in two cases it ordered the criminal order to be published as well), the Hodonín District Court always specified the specific part of the judgment to be published.
The courts have always required that mass media be the communication means for publicising the judgment. In some cases the courts also specified the medium, e.g. the monthly publication of the Prague 8 Town Hall (Měsíčník Městské části Praha 8 – Osmička), the Teplice daily newspaper – (Teplický deník), or the Orlice regional daily newspaper (Orlický deník).
Some courts specified only the general type of mass media without further details (e.g. only that it should be a regional or a nationwide newspaper, or in which administrative area the judgment should be published). In most cases, the decisions imposed only a one-time publication, but in some cases, the judgment was to be published for a period of one week.
In all cases, publication of the judgment was the only sanction imposed.
Even though there are no known cases of convicted entities attempting to bypass a court decision on the publication of a judgment, in order to minimise the consequences, this possibility cannot be excluded. Considering this risk, and that this sanction should be imposed only in the most serious cases that had major consequences, it is worth considering how the current law might be improved.
Similarly, even though there are no known examples of a publication refusing to publish a judgment, it can be expected that such cases can and will happen, and for this purpose it seems expedient to align criminal law with other areas of the law, establishing the obligation on providers of mass media to publish such judgments.
When considering the objective for publishing a judgment, it seems important that the published text be sufficiently understandable to the general public and not just to experts. Thus, it might be a good idea to make the current law clearer in this respect.
The publication of complete judgments would seem problematic from the perspective of its informational value as well. In some cases it would be preferable to publish a complete judgment, but in other cases not. We need to take into account the costs of publishing extensive judgments especially in mass media – broadcast media, electronic newspapers as well in the national press. In such cases, it might be impossible for the convicted entity to fulfil its obligations.
It is clear that current legislation on the publication of a judgment and its enforcement is inconsistent; this is reflected in current case law and may lead to problems related to the enforcement of this sanction. Thus, it is strongly recommend to supplement the current law.
For more information please contact Stanislav Mečl, Of Counsel, Prague, at .
[1] Jiří Jelínek: Nad českým zákonem o trestní odpovědnosti právnických osob, IN: Jiří Jelínek a kol.: Trestní odpovědnost právnických osob v České republice, Bilance a perspektivy, p. 115-116
[2] Jiří Jelínek: Právnickým osobám hrozí osm druhů sankcí, Právní rádce 2012